Are Charter Schools Considered “Governmental” for Retirement Plan Purposes?

By Jeff Chang

In California, charter schools are public schools that do not charge tuition or impose special entrance requirements, but are generally operated on an independent basis from local school systems. Because of the “public” nature of these schools and the fact a number of California’s more than 1300 charter schools participate in CalSTRS or CalPERS, many retirement plan advisors and consultants assume that charter schools are “governmental” for tax code (Code) employee benefit purposes. This characterization isn’t always clear cut, but the consequences of getting it wrong can be substantial.

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Why Most Retirement Plan Advisor or Recordkeeper Searches Are Not Subject to the RFP Requirements of the Sponsoring City or District

By Jeff Chang

Many cities and their retirement plan investment advisors believe that the city must periodically issue an RFP for defined contribution plan recordkeeping or investment advisory services in accordance with the city’s RFP policy or ordinance. Having reviewed the results of numerous such RFPs, we think that most cities and special districts can do a much better job of finding and evaluating their 401(a) and 457(b) service providers by going outside of the entity’s normal RFP process. In most cases, a city or district’s general contracting department cannot properly evaluate or negotiate recordkeeping or investment advisory services – they simply don’t know enough about how the plan(s) work, what these providers do and the various ways the providers are compensated.

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Plan Administrators, Plan Committees, and Public Agency 457(b) Plans

By Jeff Chang

Many investment advisors for public agency 457(b) plans believe that their public agency clients must have a retirement plan committee in order for the plan to have a proper plan administrator or fiduciary structure. As discussed below, we think that there are a lot of good reasons: (a) not to establish a formal committee as the plan administrator; or (b) to limit the scope of a committee’s responsibilities.

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Public Agency 457(b) Plans Require Ongoing Attention and Maintenance

By Jeff Chang

Previously, we described the duties and responsibilities of the plan administrator of a public agency 401(a) or 457(b) plan. While it is important for public agency employees to understand the potential scope of the plan administrator position, there is little guidance on “how” the appointed individuals should carry out these additional duties – most 457(b)s don’t come with an owner’s manual.

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Moving Between 457(b) Recordkeepers When a Stable Value Fund is Involved

By Jeff Chang

Many public agency 457(b) plans offer a stable value fund investment option. When a plan moves to a new 457(b) plan recordkeeper, the plan’s investment lineup will usually change. In those cases where the lineup includes a stable value fund, the plan’s investment advisor and the plan administrator must be keenly alert to the potentially negative impact on the values of plan participant accounts when moving out of that stable value fund. This matter needs to be reviewed and considered well before the plan can be moved to a new recordkeeper.

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